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Tyre industry performs better in Q1

George Joseph /Kochi 28 Aug 12 | 02:22 PM

The tyre industry has made a comeback on the financial front in Q1 of this fiscal, when compared to the same period last financial year.  The industry clocked an overall net profit of Rs 178 crore in the April–June period compared with a total  net loss of Rs 56.39 crore in the year-ago quarter. This is a comparison of the total net profit of the leading eight companies such as Apollo, MRF, JK and Ceat, among others.

According to the captains of the industry, a sharp reduction in the price of natural rubber had a positive impact on the cost of production of tyres. Natural rubber prices dropped more than 30 per cent in last 12-15 weeks as the price of RSS-4 sheet rubber peaked to Rs 240/Kg in April, 2011. Around 40 per cent of the total cost content in the production of tyres is natural rubber and the drop in price helped the industry perform better during the quarter under consideration.

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The industry was going through a rough patch in  2011-12 as the overall net profit was Rs 364 crore, according to figures released by the Automotive Tyre Manufacturers Association [ATMA]. This was  against a total profit of Rs 584.63 crore  in 2010-11. According to Onkar Kanwar, Chairman, Apollo Tyres, though rubber prices had come  down, the prices of other raw material, including rubber chemicals, steel tyre cord, carbon black and synthetic rubber had gone up substantially. This negatively impact the industry as a whole. The performance of the industry is better this Q1, but not yet at a comfortable level, he said, adding that he expected ‘good times’ ahead.

In Q1 of this fiscal, except Birla and Falcon, all other companies had better net profits than in the year-ago quarter. Falcon suffered a net loss of Rs 39.39 crore while Birla’s loss was Rs 69 crore. Birla had a net loss of Rs 126 crore in last Q1,  while Falcon had a net profit of Rs 8 crore.

Ceat Tyres had a neat come back in the April–June period of this fiscal as they clocked a quarterly net of Rs 25.75 crore as against a net loss of Rs 42 crore. MRF had performed better as it had a huge increase in net profit. The company posted a net profit of Rs 144.56 crore as against Rs 32 crore, while Apollo netted Rs 75.27 crore as against Rs 44.43 crore. JK also bettered their bottom line at Rs 24.71 crore as against Rs 0.96 crore in Q1 of 2011-12. TVS Srichakra’s had a set back on the profit front as their net profit dropped to Rs 1.84 crore as against Rs 12.10 crore.

Total net sales of the eight companies increased to Rs 9,685 crore from Rs 8,995 crore, with MRF on the top at Rs 3,006 crore, followed by Apollo with 2,152 crore. JK clocked net saleS of Rs 1,434 crore and Ceat had  Rs 1,181 crore. Net profit as a percentage of net sales improved to 1.8 per cent as against -0.6 per cent in Q1 of last financial year.

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